The faculty office area in the Antonio buschetti building has problems associated with the air conditioning system. Currently the existing system is centrifugal. The Department of Buildings and Grounds is evaluating two alternatives to address the situation. The first alternative consists of replacing the 50 ton chiller, the handling system and its isolation system. The initial costs are as follows: 15 years Unit Cost Useful life 50 ton centrifuge $33,000 Handlers $47,000 30 years Installation labor $1,400 n/a Materials for initial installation ** $2,500 n/a insulation system $22,000 n/a *Reduced to 40% of the original cost in case of equipment replacement. ** The cost of replacement materials is also assumed to be 40% of the original cost. Centrifuge maintenance consists of maintenance work Staff requirements work Monthly Cost duration salary Cleaning every 6 months 1 technician 1 day $1,550 1 helper $1,515 Annual water pump 1 technician 1/2 day $1,550 maintenance 1 helper $1,515 Annual visit of the $1,000 manufacturer I replace fans every three 1 technician 1 hour $1,550 $150 years 1 helper $1,515 Refrigeration Workshop attached to the Department of Buildings and Grounds of the land. The total hours that a regular employee works at the campus is 1,950 hours per year, at a rate of 7.5 hours per day. (They will need to calculate the cost associated with the time that staff spend on maintenance of this particular piece of equipment.) The additional costs associated with the operation of the centrifuge are as follows Frequency Cold water pipe insulation every 5 years $22,000 replacement cost item Cost The costs associated with electrical consumption of the centrifuge system are as follows: The cost for daily electrical consumption of a 50-ton centrifuge is $150 per day. The cost for electric consumption of the handler is $25 per day. The centrifuge system operates continuously The second alternative involves the installation of a single unit system consisting of four condensers and 41 consoles. The initial costs are as follows: cost item Unit cost Units Total cost Useful life MDV 400 condenser $9,000 two 6 years MDV 450 condenser $9,700 two 6 years Consoles 12,000 BTU $700 31 6 years Consoles 19,000 BTU $900 10 6 years Materials $35,000 n/a Installation labor $18,000 ***Includes materials for the insulation system. The cost of materials for the replacement of the consoles is ignored. ****Replacement labor is reduced to 30% of the original cost. n/a Units work duration 1.5 hours Cost of parts to replace $30/unit 41 system, doaintenance sgosista.st. maintenance work Staff requirements Console cleaning and filter 1 tesnician replacement once a year 1 helper Condenser cleaning once a 1 teshnician year 1 helper Console extraction pump 1 teshnician replacement, every 3 years 1 helper Monthly salary $1,550 $1,515 $1,550 $1,515 1 technician 1 helper 4 1 hour 41 * day $50/unit Refrigeration Workshop attached to the Department of Buildings and Grounds of the land. The total hours that a regular employee works at the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (They will need to calculate the cost associated with the time that staff spend on maintenance of this particular piece of equipment.) The additional costs associated with the operation of the console system are as follows sostitem Frequency Cost Refrigerant pipe insulation every 10 years $12,000 replacement The costs associated with the electrical consumption of the console system are as follows: The cost for electrical consumption of the complete console system is $175 per day, at a rate of 12 hours per day. Assume that the system will operate for 250 working days annually. 1. Perform a present value analysis to select the best alternative a. Consider that the replacements will be for identical units b. Sairment has no residual value c Analyze a horizon of 30 years d. Consider an interest rate of 6% 2. sensitivity analysis, keeping the centrifuge system parameters constant, and changing the shelf life of the console system from 5 years to a maximum of 10 years. 3. Perform a What Analysis if for the centrifuge system, changing the useful life of the centrifuge to 10 years and the handlers to 25 years. 3. Consider that the equipment will be purchased by a manufacturing industry. 2. Assume that the console system previously discussed will be used to provide air conditioning in a manufacturing industry. It will be installed in a certain production area that generates an income of $450,000 gross per year. Operating costs are $125,000 per year. Depreciate the console system, in operating condition, using the straight Line Method and determine the after-tax cash flow. Calculate the internal rate of return before and after taxes. Perform the analysis only for the first time the equipment is installed (Only the first cycle, depending on the life of the consoles) show calculations in excel or by hand The faculty office area in the Antonio buschetti building has problems associated with the air conditioning system. Currently the existing system is centrifugal. The Department of Buildings and Grounds is evaluating two alternatives to address the situation. The first alternative consists of replacing the 50 ton chiller, the handling system and its isolation system. The initial costs are as follows: 15 years Unit Cost Useful life 50 ton centrifuge $33,000 Handlers $47,000 30 years Installation labor $1,400 n/a Materials for initial installation ** $2,500 n/a insulation system $22,000 n/a *Reduced to 40% of the original cost in case of equipment replacement. ** The cost of replacement materials is also assumed to be 40% of the original cost. Centrifuge maintenance consists of maintenance work Staff requirements work Monthly Cost duration salary Cleaning every 6 months 1 technician 1 day $1,550 1 helper $1,515 Annual water pump 1 technician 1/2 day $1,550 maintenance 1 helper $1,515 Annual visit of the $1,000 manufacturer I replace fans every three 1 technician 1 hour $1,550 $150 years 1 helper $1,515 Refrigeration Workshop attached to the Department of Buildings and Grounds of the land. The total hours that a regular employee works at the campus is 1,950 hours per year, at a rate of 7.5 hours per day. (They will need to calculate the cost associated with the time that staff spend on maintenance of this particular piece of equipment.) The additional costs associated with the operation of the centrifuge are as follows Frequency Cold water pipe insulation every 5 years $22,000 replacement cost item Cost The costs associated with electrical consumption of the centrifuge system are as follows: The cost for daily electrical consumption of a 50-ton centrifuge is $150 per day. The cost for electric consumption of the handler is $25 per day. The centrifuge system operates continuously The second alternative involves the installation of a single unit system consisting of four condensers and 41 consoles. The initial costs are as follows: cost item Unit cost Units Total cost Useful life MDV 400 condenser $9,000 two 6 years MDV 450 condenser $9,700 two 6 years Consoles 12,000 BTU $700 31 6 years Consoles 19,000 BTU $900 10 6 years Materials $35,000 n/a Installation labor $18,000 ***Includes materials for the insulation system. The cost of materials for the replacement of the consoles is ignored. ****Replacement labor is reduced to 30% of the original cost. n/a Units work duration 1.5 hours Cost of parts to replace $30/unit 41 system, doaintenance sgosista.st. maintenance work Staff requirements Console cleaning and filter 1 tesnician replacement once a year 1 helper Condenser cleaning once a 1 teshnician year 1 helper Console extraction pump 1 teshnician replacement, every 3 years 1 helper Monthly salary $1,550 $1,515 $1,550 $1,515 1 technician 1 helper 4 1 hour 41 * day $50/unit Refrigeration Workshop attached to the Department of Buildings and Grounds of the land. The total hours that a regular employee works at the Campus is 1,950 hours per year, at a rate of 7.5 hours per day. (They will need to calculate the cost associated with the time that staff spend on maintenance of this particular piece of equipment.) The additional costs associated with the operation of the console system are as follows sostitem Frequency Cost Refrigerant pipe insulation every 10 years $12,000 replacement The costs associated with the electrical consumption of the console system are as follows: The cost for electrical consumption of the complete console system is $175 per day, at a rate of 12 hours per day. Assume that the system will operate for 250 working days annually. 1. Perform a present value analysis to select the best alternative a. Consider that the replacements will be for identical units b. Sairment has no residual value c Analyze a horizon of 30 years d. Consider an interest rate of 6% 2. sensitivity analysis, keeping the centrifuge system parameters constant, and changing the shelf life of the console system from 5 years to a maximum of 10 years. 3. Perform a What Analysis if for the centrifuge system, changing the useful life of the centrifuge to 10 years and the handlers to 25 years. 3. Consider that the equipment will be purchased by a manufacturing industry. 2. Assume that the console system previously discussed will be used to provide air conditioning in a manufacturing industry. It will be installed in a certain production area that generates an income of $450,000 gross per year. Operating costs are $125,000 per year. Depreciate the console system, in operating condition, using the straight Line Method and determine the after-tax cash flow. Calculate the internal rate of return before and after taxes. Perform the analysis only for the first time the equipment is installed (Only the first cycle, depending on the life of the consoles) show calculations in excel or by hand